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Detection Technology Oyj (HEL:DETEC): A Fundamentally Attractive Investment

Simply Wall St

Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Detection Technology Oyj (HEL:DETEC) due to its excellent fundamentals in more than one area. DETEC is a financially-healthy company with an impressive track record and a excellent growth outlook. Below is a brief commentary on these key aspects. For those interested in digging a bit deeper into my commentary, read the full report on Detection Technology Oyj here.

Flawless balance sheet with reasonable growth potential

DETEC is expected to churn out cash in the short term, with its operating cash flow predicted to expand at a triple-digit growth rate. This underlies the notable 26% return on equity over the next few years leading up to 2022. DETEC delivered a satisfying double-digit returns of 27% in the most recent year. Not surprisingly, DETEC outperformed its industry which returned 24%, giving us more conviction of the company's capacity to drive bottom-line growth going forward.

HLSE:DETEC Past and Future Earnings, October 13th 2019

DETEC's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that DETEC manages its cash and cost levels well, which is a key determinant of the company’s health. DETEC's has produced operating cash levels of 0.3x total debt over the past year, which implies that DETEC's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

HLSE:DETEC Historical Debt, October 13th 2019

Next Steps:

For Detection Technology Oyj, I've put together three fundamental factors you should further examine:

  1. Valuation: What is DETEC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DETEC is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does DETEC return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from DETEC as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DETEC? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.